This study aims to fill a major gap in our mechanistic understanding of mammalian Hedgehog (Hh) signaling. Disrupted Hh signaling leads to congenital anomalies and cancer development. Drugs that block Hh signaling have been used in clinical trials for treating human cancers related to aberrant Hh signaling. Our research in thi application focuses on Suppressor of fused (Sufu), a major negative regulator of Hh signaling. Through a proteomic approach using Sufu as a tool, we have identified new players of Hh signaling, including p66 and Mycbp. Our preliminary studies employing both gain- and loss-of function approaches provide strong evidence to support a model in which p66 plays a negative role while Mycbp plays a positive role in regulating Hh signaling. We also uncovered a new level of complexity in differential Hh responses through analysis of Sufu mutant phenotypes. These findings offer a novel conceptual framework for understanding how the Hh signal is transduced. Based on these novel discoveries, we will address a central question of Hh signaling in this application: how graded Hh responses are produced through regulation of Sufu and Gli function. Our specific aims are (1) To test the hypothesis that p66 inhibits and Mycbp potentiates Sufu's nuclear function in Hh signaling; (2) To investigate the molecular mechanisms by which p66 and Mycbp regulate Sufu function in Hh signaling; and (3) To study differential regulation of Gli proteins by Sufu and Hh responses. Taken together, these studies will offer new insight into mammalian Hh signaling and establish the foundation for diagnosis and treatment of Hh-related diseases.